Ballmer criticizes IBM’s business strategy

Microsoft CEO Steve Ballmer is a bit puzzled by IBM’s business strategy of shrinking instead of expanding, he said in an interview with The New York Times. It’s an odd assessment of IBM, which is usually seen as one of the gigantic tech superpowers.

Ballmer

“IBM is the company that is notable for going the other direction,” Ballmer told the NYT. “IBM’s footprint is more narrow today than it was when I started. I am not sure that has been to the long-term benefit of their shareholders.”

From the NYT article:

I.B.M. sold off its networking business in 1999 and then steadily exited lower-margin hardware businesses throughout this decade. I.B.M. has argued that it makes more sense to concentrate on higher-profit businesses and leave the grunt work to other guys, namely Hewlett-Packard. Today, I.B.M. directs most of its energy toward software and services and continues to sell higher-margin hardware like Unix servers and mainframes.

I.B.M.’s strategy has worked out O.K. for its investors over the last decade. Shares of I.B.M. are up about 30 percent since 1999, while shares of Microsoft have dropped about 30 percent over the same time span.